| series | collection frequency | oldest observation | newest observation |
|---|---|---|---|
| 30-year fixed mortgage rate | weekly | April 2, 1971 | January 15, 2026 |
| consumer price index | monthly | January 1, 1947 | December 1, 2025 |
| median home price | quarterly | January 15, 1953 | April 1, 2025 |
| median household income | annually | January 1, 1947 | January 1, 2024 |
How expensive is housing in the US?
I am actively updating this post. Content will change as I work my way through this article.
tl;dr
Things are bad, but not as bad as you might think.
At a national scale,
- From January 1953 to January 20261, the price-to-income ratio of a home has increased by 2.85 percentage points (pp) per year on average. As of January 2026, the ratio stands at 4.512, placing it in the 73rd percentile of all observations in this period.
- From April 1971 to January 2026, the mortgage debt-to-income ratio has decreased by -0.14 pp per year on average. As of January 2026, the ratio stands at 0.263, placing it in the 46th percentile of all observations in this period.
1 Some of the most recent data used to compute these metrics come from forecasts. See Table 1 for details on the range of the underlying data.
2 Meaning the typical house costs the typical household 4.51 \(\times\) their gross annual income
3 Meaning the typical household would spend 0.26 \(\times\) their monthly income on the typical mortgage. This calculation assumes only interest and principal.
intro
Much has been written recently on housing affordability, with much of it being negative.4 Aside from the tendency of news organizations to produce negative content, I think what is lost in these reports is historical context: where were we, and where are we now? Even when the historical context is present, metrics may be used that, if not interpreted carefully, can be misleading. For instance, longtermtrends.com gives a chart that shows the ratio of the S&P/Case-Shiller Home Price Index to the median household income. This index is used a lot since it’s high-quality and has data that dates back to 1890. However, the problem here is that the Case-Shiller index is a weighted average. The distribution of home values tend to be right skewed, so an average will be greater than the median (the typical house). So, dividing the average by the median produces a price-to-income ratio that is a bit more pessimistic. The typical person is buying the typical house, not the average house.
In order to provide some clarity on the question of housing affordability, I’m going to look at four metrics in particular:
- The ratio of the typical cost of a house to the typical household income. In this article, I’ll refer to it as the price-to-income ratio.
- The proportion of a person’s monthly income that would be dedicated to their monthly mortgage. For my analysis, this will be limited to only interest and principal5, and will assume a 20% downpayment, so a loan on 80% the value of a house. I’ll refer to it as the debt-to-income ratio in the article.
- The real6 median home price over time.
- The real median household income over time.
5 I’m interested in having a better picture of this by incorporating property taxes and home insurance costs if someone could get me the data…
6 2026 dollars
- and (2) are the most important metrics and incorporate (3) and (4). However, (3) and (4) can help provide some context to better understand (1) and (2).
analysis
I’m planning to examine this at three different geographic scales:
- national
- state
- county
national scale
the data
The data I’m using is mostly from the FRED. I’ve supplemented some of these series with data extending further back to get a more complete picture. Below are the data series and where I got the supplemental data:
- CPIAUCSL: Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- MEHOINUSA646N: Median Household Income in the United States
- Years 1947-1965 are from p.877 of a US Census Bureau publication.
- Years 1967-1983 are also from the US Census Bureau
- MORTGAGE30US: 30-Year Fixed Rate Mortgage Average7 in the United States
- MSPUS: Median Sales Price of Houses Sold for the United States
7 Unfortunately, there is no high-frequency median equivalent to this data that I know of. Fortunately, there are some restrictive filters (e.g. 20% down, excellent credit, excluding jumbo loans) on which data to use that removes large outliers making the mean more centered. See here for more details
Let’s take a look at the data below:
There are a few things that need to be handled before analysis:
- The data is captured at different frequencies.
- Not all the data is recent.9
9 The 30-year fixed mortgage rate is the most egregious offender. The reason for this, is that Freddie Mac began surveying lenders on mortgage rates in April 1971, making this the earliest date for which consistent, nationwide data is available.
To account for (1), I put everything in a monthly frequency. Cubic splines were used for quarterly and annual data, while weekly data was averaged. For (2), I first smoothed each series using LOESS then modeled each series using ARIMA to produce estimates for the most recent date available (January 2026). These estimates should be taken with a grain of salt, though I include \(3 \sigma\) prediction intervals to capture the uncertainty.
These smoothed indicators are used to calculate the metrics in the following sections.
the metrics
real median home price
Let’s put the nominal median home price in 2026 dollars. I’ll include a linear model to help us understand the trend over time.
From January 1953 to January 2026, the real median home price has increased by $3,462 per year on average. This translates to roughly 1.57 pp per year. As of January 2026, the real median home price stands at $417,986, placing it in the 90th percentile of all observations in this period.
What complicates this analysis is that the typical house from 1950 looks much different than the typical house from today. Across the decades, houses look pretty different, whether that be square footage or amenities. Nano Banana10 can give us a visual sense of these differences:
10 Nano Banana is an AI image generator from Google. I thought these images were pretty good, but if you want some real examples you could peruse the book House and Plans, 1950 and just look at new builds on Zillow.


A few key figures on these differences:
| feature | 1950’s home | 2020’s home |
|---|---|---|
| median size | under 1,000 sq ft | over 2,000 sq ft |
| complete plumbing | 66% | 99% |
| air conditioning | under 2% | over 90% |
Andrew Latham did a great analysis on housing affordability where he found that the price per square foot of a house (ignoring amenities) from 1978-2023 grew by 20% which works out to roughly 0.44 pp per year which is about 0.28 the rate of house prices in general.
Of course the problem in all this, is you can’t buy a 1950’s house today11; the option for a smaller house just isn’t available. Those aren’t the houses being built12, so buyers are left with nicer, more expensive houses.
11 Not that anyone would want to!
12 The median square footage of new builds has been decreasing over the last decade. Hopefully this is a trend that will continue if there is an appetite for it.
Fortunately, we are coming out of a bubble which peaked in early 2022, so prices are cheaper today than a few years ago. However, unless housing policy/supply changes, we should expect housing to get more expensive.
real household income
Let’s put the nominal median household income in 2026 dollars. I’ll include a linear model to help us understand the trend over time.
From January 1947 to January 2026, the real median household income has increased by $398 per year on average. As of January 2026, the real median household income stands at $92,742, placing it in the 100th percentile of all observations in this period.
price-to-income ratio
We can use nominal dollars to calculate the price to income ratio. I’ll include a linear model to help us understand the trend over time.
From January 1953 to January 2026, the price-to-income ratio of a home has increased by 2.85 percentage points (pp) per year on average. As of January 2026, the ratio stands at 4.5113, placing it in the 73rd percentile of all observations in this period.
13 Meaning the typical house costs the typical household 4.51 \(\times\) their gross annual income
debt-to-income ratio
From April 1971 to January 2026, the mortgage debt-to-income ratio has decreased by -0.14 pp per year on average. As of January 2026, the ratio stands at 0.2614, placing it in the 46th percentile of all observations in this period.
14 Meaning the typical household would spend 0.26 \(\times\) their monthly income on the typical mortgage. This calculation assumes only interest and principal.